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The Week Ahead: ECB rate decision; UK banks, Apple results

UK banks and US tech stocks lead a bumper week for corporate earnings in the week ahead. Lloyds Banking Group’s results will be among the most closely watched – as the UK’s biggest mortgage lender, it is widely regarded as a bellwether for the British economy. Across the pond, the so-called “MAMAA” stocks – that’s Microsoft, Apple, Facebook owner Meta, Amazon, and Google owner Alphabet – are all due to report their latest numbers. Meanwhile, central banks in the eurozone, Canada and Japan are set to make key interest rate decisions as they seek to tame rising prices. 


Thursday – European Central Bank interest rate decision

At its last meeting in September, the European Central Bank raised interest rates by 75 basis points (bps) after banks upgraded their eurozone inflation forecasts to 8.1% in 2022 and 5.5% in 2023. These targets already look dated, now that German inflation is well above 10% and the EU headline rate is also in double figures. A growing number of ECB policymakers support higher rates, despite an acknowledgment that GDP is likely to fall. The euro area’s central bank has cut its 2023 and 2024 GDP growth forecasts to 0.9% and 1.9%, respectively, marking a slowdown from the 2022 forecast of 3.1%. But even these forecasts seem optimistic given the steep rise in energy prices. 

The ECB expects to continue raising rates in upcoming meetings, albeit probably at a slower pace than the Federal Reserve. Mind you, a number of ECB governing council members have discussed the need to front-load rate hikes to swiftly get headline interest rates up to 3%. This would be a huge jump from current interest rates of 1.25%. If the ECB raises rates by another 75 bps this week, the effect on indebted member states like Italy could be problematic. Although the ECB has introduced its transmission protection instrument (TPI), a programme that aims to ensure that the ECB’s monetary policy stance is transmitted smoothly across all eurozone countries, questions remain as to how it might work. There is also the added problem that aggressive tightening is precisely the wrong medicine at a time when demand is cratering and the bloc’s largest member economy, Germany, is likely to tip into recession by the end of the year.

Thursday – Lloyds Banking Group Q3 results

Lloyds’ shares continue to underperform, despite the bank being in much better financial health than it was five years ago. The shares, down more than 15% this year, retested their March lows after the UK mini-budget. In Q2 the bank posted a strong set of numbers, despite concerns over an economic slowdown in the second half of the year. Statutory pre-tax profits for the quarter came in at over £2bn, up from £1.6bn in Q1, beating analyst estimates of £1.71bn. The bank also set aside £200m to cover potential losses from bad loans, bringing the total net underlying impairment provision for the first half to £377m. Loans and advances to customers grew by £4.3bn to £456.1bn in Q2, driven by increases in credit card balances and unsecured loans. This trend is likely to have slowed in Q3 as higher interest rates and concerns about rising inflation may have acted as a brake on consumer confidence. 

With the UK economy slowing and mortgage rates rising, Lloyds – the country's largest mortgage lender – may have to further increase its provisions for non-performing loans. In the current climate, the last thing the UK banking sector needs is the windfall tax that was proposed this week by new chancellor Jeremy Hunt. UK banks already pay an 8% banking subsidy on top of the headline corporation tax rate, which is going up to 25% next year. The bank must also keep an eye on operating costs, which rose to £2.15bn in Q2, up from £2.1bn in Q1, and are expected to total £8.8bn this year. Lloyds boosted its guidance on net interest margin to 2.7% and raised its estimated return on tangible equity to above 11%. The bank also increased its dividend to 80p per share in Q2. 

Thursday – Apple Q4 results

Revenue for the three months to 25 June came in at $83bn, which – for a company that usually beats expectations – was somewhat unusually in line with analyst forecasts. Profits came in at $1.20 a share, a narrow beat. Breaking the results down by product revealed a mixed picture, with only the iPhone delivering revenue growth on the year-ago period. Revenue from its smartphones grew 2.8% to $40.67bn, beating expectations. 

Revenue from the iPad range also beat expectations in Q3, despite dropping to $7.22bn. Meanwhile, Mac revenue came in more than $1bn short of estimates at $7.38bn. Revenue for wearables, home and accessories was just under $8.1bn. Services revenue grew year-on-year but came in below expectations at $19.6bn. By region, both Greater China and Japan saw a decline in sales, raising the prospect that Apple might discount its products in Japan, as it did in China earlier this year. True to form, Apple didn’t offer any guidance for Q4. 

In September the company unveiled new products in time for the Thanksgiving and Christmas shopping season. This period tends to be Apple’s best quarter of the year. The product launch, which Apple named “Far Out”, introduced the new iPhone 14 range and the Apple Watch Ultra before they went on sale from 16 September. Surprisingly, Apple kept prices for its new iPhones unchanged from the previous line, suggesting that the company is in touch with its customers’ cost-of living concerns. 

Despite the lower-than-expected price point for its new phones, Apple is reported to be cutting back iPhone 14 production due to low demand. Instead, it is concentrating on the iPhone 14 Pro, for which demand seems to be holding up better. Profits for Q4 are expected to come in at $1.26 a share. 


Monday 24 October

No major announcements

Tuesday 25 October

HSBC Q3 results

HSBC shares hit their lowest levels of the year earlier this month after the sharp rise in yields caused by the UK mini-budget and amid concerns over the health of the Chinese economy as the country’s leadership doubles down on its zero-Covid policy. In the aftermath of HSBC’s half-year numbers the shares briefly hit five-month highs, up over 20% year-to-date, before slipping back. While still in positive territory for the year, it’s likely that the second half for HSBC will be tough. 

Despite concerns at the end of Q1 that the weakening economic outlook would weigh on Q2 performance, the bank delivered a strong set of numbers. Reported profits before tax in Q2 rose to $5.8bn, helped by a $1.8bn deferred tax gain. Half-year impairment charges came to $1.1bn, lifting first-half reported profits after tax to $9.2bn. Reported revenue for the same period slipped slightly to $25.2bn. 

The Asia business, as expected, accounted for the bulk of the bank’s profits in the first half, contributing $6.3bn. The UK operation also performed well, with profits here rising 15% to $2.5bn. The bank cited the positive impact of higher interest rates as net interest margin increased to 1.35%, up from 1.2% a year ago Net loans and advances to customers fell year-on-year to £1.03bn, partly because of reduced business activity in lockdown-affected China. 

The bank raised its guidance for net interest income this year, and said that it expected to return to paying quarterly dividends in 2023. The bank plans to improve the payout ratio of 50% in 2023 and 2024. This appears to be in response to criticism from shareholders like Ping An who were unhappy about the bank's decision to suspend the dividend in 2020 due to the pandemic. Management has continued to push back on calls from Ping An to break up the business     

Whitbread half-year results

It feels almost counterintuitive that at a time when consumer incomes are shrinking and the cost of going abroad is getting higher that Premier Inn owner Whitbread’s share price should be slowly drifting lower. With all the headlines about disruptions at airports the outlook for staycations would expect to be more positive, however the shares are still down over 15% year to date, with the shares hitting their lowest levels since November 2020 in early October. In June when the company reported its Q1 numbers the picture was a decent one. Q1 sales were above expectations, helped by a reopening dividend compared to the same period a year before. The UK hotels saw accommodation sales rise 235.6%, ahead of last year and 31% above 2020 levels. UK like for like sales were also higher by 21.3% from the same levels in 2020, although food sales were lower by 4.3%. Management also pledged to spend a further £20m to £30m on labour costs, and investment in 2023. This is a number that could edge higher given rising prices over the course of the past few months.     

Microsoft Q1 results

Microsoft brought the curtain down on another record year back in July, by reporting revenue and profit which fell short of market expectations. Nonetheless, Q4 revenue still rose by 12% to a record $51.87bn. Total revenue for the year was just shy of $200bn, at $198.37bn, with Microsoft pointing to a strong US dollar and a slowing PC market as a bit of a drag. Since then, the US dollar has continued to rise, so expect this to continue to act as a drag, with the shares currently trading around 20-month lows. 

The Intelligent cloud segment, which includes Azure, recorded a 20% increase in revenue to $20.91bn, while its office division, which includes LinkedIn, brought in $16.6bn in revenue. PCs and gaming revenue was only slightly above the levels a year ago at $14.36bn, with negative sales growth in Xbox and content of -6%, and Windows OEM of -2%. This is likely to continue to be a theme in Q1. As far as the outlook was concerned, Microsoft said it expected to Q1 revenue to come in between $49.25bn and $50.25bn, which would still be 10% higher than a year ago, and not exactly what could be described as slowdown territory. However, it would still be markedly lower compared with Q4. Profit is expected to come in at $2.32 a share. 

Alphabet Q3 results

With Alphabet shares at 18-month lows, there has been growing concern that the slowdown in global markets will cause a fall in advertising revenue, along with the fact that the recent Apple iOS data collection changes have adversely affected all social media companies and their ad targeting efforts. In Q2, total revenue fell marginally short at $69.7bn, with YouTube revenue missing estimates at $7.34bn. Search was more resilient, with ad revenue coming in at $56.3bn, in line with forecasts, although profit fell short at $1.21 a share. As the market leader, a big miss here would have been troubling, so the fact that the numbers held up was encouraging. This hasn’t, however, stopped the shares from slipping lower over the past few weeks. Profit is expected to come in at $1.26 a share.

Wednesday 26 October

Bank of Canada interest rate decision

Are we near to peak rate hikes for the Bank of Canada. It seems unlikely given the direction of travel from the Federal Reserve. We saw the Bank of Canada raise rates by another 75bps, following on from the 100bps seen in July. There is already increasing evidence that wages are starting to rise in response to this recent inflation surge, however headline CPI does appear to be showing signs of slowing with headline CPI falling to 7% in August, from the June peaks of 8.1%. This suggests we could well see 50bps at this week’s meeting rather than the customary bumper hikes we’ve become used to. The increased focus on core prices appears to be driving the dynamics here and while lower they are much stickier at around 5.7%. 

Barclays Q3 results

Barclays’ recent first-half numbers were underwhelming, and it’s not hard to see why. Attributable profit for H1 was £2.5bn, down sharply from the same period a year ago, with £1.1bn of that coming in Q2. The bank had to take a charge of £600m in respect of over-issuance of securities, which it had to buy back. On the wider figures, investment bank revenue for Q2 came in at just over £4bn, beating expectations of £3.7bn, with FICC slowing modestly from Q1, to £1.5bn. Its equity and debt capital markets division saw a big drop in revenue over the first half, although advisory performed slightly better in Q2, after a poor Q1. The UK bank’s H1 profit fell 16% from a year ago to £854m, mainly due to last year’s numbers receiving a boost from a loan-loss release, while this year included £48m set aside for loan-loss provisions. Operating expenses for this year are expected to rise sharply due to the various litigation costs, pushing the total up to £16.7bn, well above the previous guidance of £15bn. 

Meta Platforms Q3 results

Meta Platforms’ share price has had a shocker of a year, with the shares down over 60%, and close to levels last seen in late 2018. The big drop came in its February earnings, as the social media giant had an awful start to its financial year. The shares tanked after a decline in daily and monthly active user numbers, as the various Apple privacy changes started to hit revenue, which saw Facebook downgrade its Q1 outlook to between $27bn and $29bn in revenue. 

In Q2, revenue did marginally improve to $28.82bn, while profit came in slightly below expectations at $2.46 a share. Active users were a mixed bag, with daily active users slightly above expectations at 1.97bn, however monthly users came in at 2.93bn. Q3 guidance was nudged lower to between $26bn to $28.5bn, well below what markets had hoped. Facebook is also facing an additional challenge from the likes of TikTok, which is pulling users away from Instagram. Meta is also facing rising costs, with its headcount up by over 30% from a year ago, with operating expenses expected to be between $85bn and $88bn. The focus on the Metaverse is also weighing, with its investment there showing few signs of paying off in terms of profit in the short term. It’s Meta Reality Labs unit lost $2.8bn in Q2, while only bringing in sales of $452m. Profit is expected to come in at $1.91 a share.

Thursday 27 October

ECB rate decision; Lloyds Q3 results; Apple Q4 results

See our top three events, above


The US economy contracted 1.6% on an annual basis in Q1 and shrank a further 0.6% in Q2. Two consecutive quarters of declining GDP put the US in a technical recession, so it seems somewhat counterintuitive that economists expect Q3 to deliver a rebound of 2.2%. Growth is thought to have mainly been driven by firms rebuilding their inventories. US markets generally interpret an uptick in GDP as a positive development for the dollar. After Thursday’s initial estimate, two further readings will follow in the coming weeks, though these later prints are unlikely to be market-moving.

Shell Q3 results

Shell, like all the oil majors, has recorded a big jump in revenue and profit this year, although it has still had its fair share of problems, as it looks to disentangle itself from Russia. Q2 was another record quarter for the oil major. On an underlying basis, Q2 adjusted profit more than doubled from a year ago, to a new record of $11.47bn, pushing H1 profit to $20.6bn. Integrated gas contributed $3.76bn, while upstream contributed $4.9bn to the Q2 numbers. This inevitably raises the question, can Shell continue to maintain this level of profitability in the second half of the year, given that oil and gas prices have both fallen from their peaks of the last three months  

Shell has continued to make big strides in reducing its net debt, which pre-pandemic was over $75bn. The company has cut that further, from $48.5bn in Q1 to $46.4bn, as well as lowering gearing to below 20%. In the last year alone, debt has fallen by $20bn. The company announced another $6bn in share buybacks in Q2, inviting further criticism when compared to their meagre investment in renewables, while the dividend was kept unchanged at $0.25 a share. 

For Q3, the company maintained its guidance on capex at between $23bn and $27bn this year, spending $5bn in Q1, and $7bn in Q2; however of that $7bn, only $321m was spent on renewables, down from $985m in Q1. The amount of profit renewables contribute to the bottom line is also relatively tiny, at $725m in the last quarter, and just over $1bn for the half year. During Q2 Shell announced the final investment decision to develop the Jackdaw gas field in the North Sea, as well as a deal in Australia to approve a natural gas field there. They also signed a deal with QatarEnergy for the expansion of the North Field natural gas project. There has also been further talk of a windfall tax on top of the already high 65% tax rate on their UK profits. 

Unilever Q3 results

After the shambles of earlier this year when CEO Alan Jope decided it was a good idea to try and bid £50bn for the consumer health care business of Glaxo, which eventually IPO’d in July at well below that number, Unilever shares have gone from strength to strength. It was Jope’s good fortune that GSK rejected that bid, however he won’t be around much longer to enjoy the fruits of the recent rebound in the share price that has taken place since the shares hit 5-year lows in March. Last month it was announced that Jope would be stepping down at the end of next year, with some investors calling for a review of the company’s brands, in the wake of recent share price weakness. There was some good news at its Q2 numbers which saw the company report a 14.9% rise in revenues to €29.6bn, largely due to its ability to raise prices. Costs have gone up and that has hit margins to a certain extent, but the effect has been minimal with underlying margins slipping 180bps to 17% in H1. Underlying sales during the first half rose by 8.1%, while underlying earnings per share rose by 1%, with the company raising its full year guidance for sales growth to above the previous range of 4.5% to 6.5%, with Q2 showing strong gains across all three business areas, Home Care, Foods and Refreshment and Beauty and Personal Care. The bigger question is whether the optimism shown at the end of H1 can be maintained through the second half of the year.         

Amazon Q3 results

When Amazon reported its Q2 results back in July, the main focus was on whether it would show signs of suffering from similar problems to Walmart, with respect to shrinking margins and rising costs. Last year, Amazon spent $445bn, up from $363bn in 2020. For Q2, revenue came in slightly above expectations at $121.1bn, with the decision to raise prices on Prime not having the negative effect a lot of people though it might have. Revenue here rose 14% to $8.7bn, as Amazon spent big on new TV content, including sport, as well as the new mini-series The Rings of Power, a Lord of the Rings prequel, which has had mixed reviews. On the downside, the company reported its second consecutive quarterly loss, this time due to another $3.9bn writedown of its stake in Rivian. In Q1, it posted a $3.8bn net loss due to a $7.6bn writedown on the very same stake. 

There were bright spots, as AWS posted another record quarter of $19.74bn, while operating margins came in at 2.7%, well above expectations of 1.65%. There was also evidence that costs were starting to level out, as operating expenses came in at $117.9bn which was below expectations, with Amazon shedding over 100,000 employees during the quarter, mainly through attrition in its warehouse network. There was some chatter a few weeks ago that Amazon might be interested in video game maker Electronic Arts, however this was denied quite quickly, although there’s usually no smoke without fire. For Q3, Amazon raised its revenue guidance to between $125bn and $130bn, while profit is expected to come in at $0.24 a share – assuming no more Rivian writedowns. 

Friday 28 October

Bank of Japan interest rate decision

With the Japanese yen set to fall to 32-year lows against the US dollar the focus remains firmly on the Bank of Japan and its apparent unwillingness to alter course on its own monetary policy settings. We’ve already seen the first round of intervention which saw the yen initially strengthen, however until such time as we see some sort of pivot from the Japanese central bank then further weakness towards 150 and 160 looks increasingly likely. The Bank of Japan’s CPI forecast is expected to be pushed up from its current 2.3%, especially given that we’re already at 3%, and an 8 year high, and there is little sign that price pressures are diminishing.                     

US PCE price index (September)

The closely watched core personal consumption expenditures (PCE) price index, which excludes volatile food and energy prices and is said to shape the US Federal Reserve’s monetary policy, increased 4.9% in the year to August, up from 4.7% in July. Core inflation has become stickier as higher prices for services and wage growth become embedded. 

Core PCE is expected to jump to 5.2% in September, increasing the likelihood that the Fed will raise interest rates by another 75 bps at their upcoming meetings in November and December. 

NatWest Q3 results

Back in July, NatWest offered up a fairly decent set of numbers, announcing an interim dividend of 3.5p, as well as a 16.8p special dividend, after reporting a solid set of H1 results. Attributable profit to shareholders rose to just over £1bn, pushing half-year profit up to £1.89bn, as net interest margins improved from 2.46% in Q1, to 2.72% in Q2, taking H1 NIM to 2.59%. It was notable that the retail side of the business did see H1 impairments of £26m, however this was more than offset by addbacks in other parts of the business. Net loans to customers rose to £188.7bn, from £184.7bn in Q1, and up by £6.5bn in the first half of the year. £5.9bn of this was by way of mortgages, with lending evenly split between Q1 and Q2, with the remaining £600m being made up of credit card and loan balances. Customer deposits increased to £190.5bn. The share price has also been hit in recent weeks from the turmoil in UK bond markets, as well as speculation of a windfall tax on their profits. With the UK government already a big shareholder, politicians need to understand NatWest success is their success, in terms of a higher profit, and a bigger dividend.


Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule.


Dorman Products (US)Q3
3M Co (US)Q3
Alphabet (US)Q3
Chipotle Mexican Grill (US)Q3
Coca-Cola (US)Q3
General Electric (US)Q3
General Electric (US)Q3
Halliburton (US)Q3
Hubbell (US)Q3
Invesco (US)Q3
Mattel (US)Q3
Microsoft (US)Q1
Moody's (US)Q3
Shutterstock (US)Q3
Skechers USA (US)Q3
United Parcel Service (US)Q3
Visa (US)Q4
Whitbread (UK)Half-year
Barclays (UK)Q3
Bloomsbury Publishing (UK)Half-year
Boeing (US)Q3
Bristol-Myers Squibb (US)Q3
Ford (US)Q3
Harley-Davidson (US)Q3
Kraft Heinz (US)Q3
Meta Platforms (US)Q3
Morningstar (US)Q3
Standard Chartered (UK)Q3
Thermo Fisher Scientific (US)Q3
Upwork (US)Q3
Airtel Africa (UK)Half-year
Altria Group (US)Q3
Amazon (US)Q3
American Tower Corp (US)Q3
Apple (US)Q4
Caterpillar (US)Q3
Cazoo Group  (US)Q3
Columbia Sportswear (US)Q3
First Solar (US)Q3
Gilead Sciences (US)Q3
Hertz Global Holdings (US)Q3
Honeywell International (US)Q3
Indivior (UK)Q3
Intel (US)Q3
Janus Henderson Group (US)Q3
Linde (US)Q3
Lloyds Banking Group (UK)Q3
Mastercard (US)Q3
McDonald's (US)Q3
Shell (UK)Q3
Unilever (UK)Q3
Vertex Pharmaceuticals Inc (US)Q3
Willis Towers Watson (US)Q3
AbbVie (US)Q3
Colgate-Palmolive (US)Q3
Exxon Mobil (US)Q3
International Consolidated Airlines Group (UK)Q3
NatWest Group (UK)Q3
NextEra Energy (US)Q3

Company announcements are subject to change. All the events listed above were correct at the time of writing.

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